Canada’s main stock index extended its winning streak for the fifth-straight day on Wednesday as worries of tightening U.S. credit conditions further dissipated, while retailer Loblaw slipped after reporting quarterly results.
At 10:10 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 81.8 points, or 0.41%, at 20,105.53.
Loblaw reversed from early gains and slid 1.1% even though the food and pharmacy retailer beat third-quarter profit estimates on steady demand for essentials amid surging food prices in the country.
Cost-conscious customers have traded down to cheaper private-label brands as stubbornly high grocery prices weigh on their cost of living, boosting sales of the Brampton, Ontario-based retail chain.
The low-cost retailer company “had to raise prices, and so their numbers were looking better,” Allan Small, senior investment advisor at Allan Small Financial Group, said.
Broader market sentiment also got a lift after data showed U.S. October retail sales fell, after months of strong gains, strengthening expectations that the Federal Reserve is done hiking interest rates.
Rate-sensitive sectors like tech and real estate led gains, adding 1.4% and 0.6%, respectively.
Healthcare stocks surged 2.8%, boosted by a 2.4% rise in Bausch Health Companies.
The TSX has gained steadily over the past four sessions as commodity-linked sectors surged on hopes that the Fed was done with demand-denting rate hikes, while investors remained hopeful that the local economy would achieve a soft landing.
Among other movers, Lithium Americas added 4.6% after brokerage National Bank Of Canada initiated coverage on the miner with an “Outperform” rating and a price target of C$16.
Specialty food manufacturer Premium Brands Holdings added 1.5% after brokerage Stifel raised its rating on the stock to “buy”.
Meanwhile, data showed domestic factory sales in September rose by 0.4% on a monthly basis, ahead of expectations of a 0.1% decline, underpinned by higher sales of petroleum, coal products and wood products ahead of the winter season.
U.S. stock indexes edged higher on Wednesday, following big gains in the prior session, as cooling producer prices supported views that the Federal Reserve has finished raising interest rates, while Target shares surged following an upbeat holiday-quarter forecast.
Target advanced 17.6% as the big-box retailer forecast fourth-quarter profit largely above Wall Street expectations on easing supply-chain costs.
The bright outlook also lifted shares of other retailers, while the S&P 500 consumer staples index, which houses Target, jumped 0.7%.
Data on Wednesday showed retail sales fell less than expected in October, slipping 0.1% against forecasts of a 0.3% fall per economists polled by Reuters.
U.S. producer prices eased more than expected amid a sharp drop in gasoline costs, providing further evidence that inflation was trending lower.
“Given the strong consumer – which isn’t surprising given the employment picture – it is only reasonable to assume that corporate profits will continue to grow and this should only add fuel to the fire for the year-end rally,” noted Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
“Inflation for now is coming back down and the economy for now continues to grow at a robust pace, so the only logical direction for stocks is higher.”
The benchmark S&P 500 and the tech-heavy Nasdaq posted their biggest daily percentage gain in more than six months on Tuesday as softer-than-expected consumer prices data raised hopes that U.S. interest rates have peaked.
Money market traders have fully priced in the odds that the U.S. central bank will keep rates steady in December, as per CME Group’s Fedwatch tool. They also see the first rate cut of the cycle to kick off in May 2024.
Focus will also be on meeting between U.S. President Joe Biden and Chinese leader Xi Jinping for the first time in a year on Wednesday, for talks that may ease friction between the adversarial superpowers on military conflicts, drug-trafficking and artificial intelligence.
The Dow Jones Industrial Average was up 80.18 points, or 0.23%, at 34,907.88, the S&P 500 was up 10.63 points, or 0.24%, at 4,506.33, and the Nasdaq Composite was up 36.87 points, or 0.26%, at 14,131.25.
Further aiding the mood, the U.S. House of Representatives passed a temporary spending bill that would avert a government shutdown, with broad support from lawmakers in both parties.
To prevent a shutdown, the Senate and Republican-controlled House must enact a legislation that Biden can sign into a law before current funding for federal agencies expires at midnight on Friday.
Among other stocks, TJX fell 3.9% as the off-price apparel chain cut its fourth-quarter profit forecast.
U.S.-listed shares of Chinese ecommerce firm JD.com climbed 6.8% after the company posted a surge in profit. Walt Disney shares gained 2.7% on a report stating activist investor ValueAct Capital has taken a stake in the company.
Sirius XM surged 8.1% as Warren Buffett’s Berkshire Hathaway took a stake in the audio entertainment company.
Reuters
